Category Archives: Miscellaneous

Here is a nice article in Wired about Googlenomics, featuring my co-author and friend Hal Varian. This describes a number of ways that Google has combined vast data mining resources with economics to do some incentive-centered design.
Hal is a micreconomist par excellence, who has made important contributions to both theory and empirical work. He was one of the first economists who took the study of the Internet and related phenomena seriously.
He was my colleague at Michigan, and involved in some of the early meetings in which a group of us developed the plan to create the School of Information. The year we launched, however, he departed for Berkeley, where a year later he was dean of their new School of Information (called SIMS at the time, but since renamed). For the past few years he has been on leave from Berkeley to be the Chief Economist at Google.

Microsoft’s Performance Evaluation System Roils Coders
This is a nice recent example of an age-old hidden action problem for managers: how to compensate brain workers, whose effort is intrinsically hard to monitor? The story here concerns Microsoft’s performance incentives for programmers. According to a recent report (by an organization that is trying to organize a union at Microsoft, so take the tone with a grain of salt),

The way it works is that under this system, managers can only give out so many high marks. If everyone on a manager’s team did 4.0 work, only two of them might be able to get them.

Benchmarking is a standard, almost necessary way to assess performance in an organization with a large number of brain workers, but no benchmark system is perfect, and it’s not obvious which will be the best system for a given environment.

According to The New York Times, a study in The Journal of the American Medical Association found that doctors misdiagnose fatal illnesses about 20% of the time, and that this rate has been the same since 1930 (Leonhardt, “Why Doctors So Often Get it Wrong”, NYT, 22 Feb 2006). The NYT argues that the problem is largely one of missing incentives:

Doctors, nurses, lab technicians and hospital executives are not actually paid to come up with the right diagnosis. They are paid to perform tests and to do surgery and to dispense drugs.